Correlation Between Wheaton Precious and Ironveld Plc

Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Ironveld Plc at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Wheaton Precious and Ironveld Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wheaton Precious Metals and Ironveld Plc, you can compare the effects of market volatilities on Wheaton Precious and Ironveld Plc and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Wheaton Precious with a short position of Ironveld Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Ironveld Plc.

Diversification Opportunities for Wheaton Precious and Ironveld Plc

-0.47

Correlation Coefficient

Wheaton Precious  Ironveld Plc

Very good diversification

The 3 months correlation between Wheaton and Ironveld is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Ironveld Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ironveld Plc and Wheaton Precious is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Wheaton Precious Metals are associated (or correlated) with Ironveld Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ironveld Plc has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Ironveld Plc go up and down completely randomly.

Pair Corralation between Wheaton Precious and Ironveld Plc

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 1.9 times more return on investment than Ironveld Plc. However, Wheaton Precious is 1.9 times more volatile than Ironveld Plc. It trades about 0.02 of its potential returns per unit of risk. Ironveld Plc is currently generating about 0.02 per unit of risk. If you would invest  460,525  in Wheaton Precious Metals on October 6, 2024 and sell it today you would earn a total of  4,475  from holding Wheaton Precious Metals or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Wheaton Precious Metals  vs.  Ironveld Plc

Wheaton Precious Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Wheaton Precious is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Ironveld Plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ironveld Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ironveld Plc is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wheaton Precious and Ironveld Plc

The main advantage of trading using opposite Wheaton Precious and Ironveld Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Ironveld Plc can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ironveld Plc will offset losses from the drop in Ironveld Plc's long position.

The idea behind Wheaton Precious Metals and Ironveld Plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.